Total sales Rs 2,500,000; Credit Sales 90%; Credit Period 1 months; cost of carrying debtors at variable cost 21,000; Cost of Finance 16%. Then Variable cost% on sales must be a. 75% b. 65% c. 60% d. 70%

Total sales Rs 2,500,000; Credit Sales 90%; Credit Period 1 months; cost of carrying debtors at variable cost 21,000; Cost of Finance 16%. Then Variable cost% on sales must be a. 75% b. 65% c. 60% d. 70%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

Total sales Rs 2,500,000; Credit Sales 90%; Credit Period 1 months; cost of carrying debtors at variable cost 21,000; Cost of Finance 16%. Then Variable cost% on sales must be

75%

65%

60%

70%

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